Question 1

Relevance is the measure of the quality or reliability of the audit evidence, whereas competence relates to whether the evidence is pertinent to the assertion being tested.

Accepted Answer

Relevance relates to whether the evidence is pertinent to the assertion being tested, whereas competence is the measure of the quality or reliability of the audit evidence.

Question 2

Tracing produces primarily analytical evidence.

Accepted Answer

Tracing is primarily used to test the completeness assertion and provides evidence about whether all transactions and accounts that should have been recorded have been recorded, rather than producing analytical evidence. Analytical procedures involve evaluating financial information by studying plausible relationships among both financial and non-financial data.

Question 3

The second standard of fieldwork requires the auditor to obtain sufficient competent evidence through audit procedures to afford a reasonable basis for an opinion on the financial statements.

Accepted Answer

False

Question 4

Observing relates to watching or witnessing the performance of an activity or process.

Accepted Answer

Observing involves paying close attention to or monitoring the execution of an activity or process, often for the purpose of gathering information, making assessments, or learning.

Question 5

In practice, the terms "working paper schedule" and "working paper analysis" are used interchangeably.

Accepted Answer

The terms "working paper schedule" and "working paper analysis" are often used interchangeably in practice, as they both refer to the process of organizing and analyzing working papers.

Question 6

Confirmations provide important evidence and are used in auditing because the evidence is usually objective and comes from an internal source.

Accepted Answer

Confirmations are considered important evidence in auditing because they are usually obtained from independent external sources, enhancing their reliability.

Question 7

Industry trade associations are not usually good sources of information about the key competitiveness factors in an industry.

Accepted Answer

Industry trade associations often gather and disseminate detailed information about market trends, regulatory changes, and other factors affecting competitiveness within an industry, making them valuable resources for understanding key competitiveness factors.

Question 8

Inquiring involves only written inquiry by the auditor.

Accepted Answer

Inquiring involves both written and oral inquiries as part of the auditor's information gathering procedures.

Question 9

Much of the audit planning, including obtaining an understanding of internal control, assessing control risk, and the application of substantive tests of transactions can be conducted prior to the balance sheet date.

Accepted Answer

Audit planning and preliminary procedures, including understanding internal controls, assessing control risk, and applying substantive tests to transactions, can indeed be performed before the balance sheet date to ensure an efficient and effective audit process.

Question 10

The extent of audit procedures does not relate to the auditor's decision about how much audit evidence to obtain.

Accepted Answer

The extent of audit procedures directly relates to the auditor's decision about how much audit evidence to obtain, as it determines the quantity of evidence needed to reach an appropriate level of assurance.

Question 11

Valuation is generally considered to be the same as existence by practicing auditors.

Accepted Answer

Valuation and existence are two distinct audit assertions. Valuation refers to ensuring that assets, liabilities, and equity interests are recorded at appropriate amounts, while existence verifies that assets, liabilities, and equity interests actually exist.

Question 12

Vouching and tracing are synonyms.

Accepted Answer

Vouching involves checking the authenticity of transactions recorded in the books of accounts by examining the supporting documents, while tracing is the process of following transactions from the original documents to the final recorded entry to ensure they are correctly recorded.

Question 13

The knowledge, skill and ability of personnel assigned engagement responsibilities should be commensurate with the auditor's assessment of the level of risk related to those responsibilities.

Accepted Answer

This statement aligns with auditing standards which require that the audit team assigned to an engagement possess the appropriate competence and capabilities, including the necessary knowledge, skills, and abilities, to respond adequately to the assessed risks of the audit.

Question 14

Auditing procedures are the methods or techniques used by the auditor to gather and evaluate sufficient, competent evidential matter.

Accepted Answer

Auditing procedures refer to the specific methods or techniques that auditors use to collect and assess evidence during an audit, ensuring it is sufficient and appropriate to support their opinion on the financial statements.

Question 15

The Sarbanes-Oxley Act requires the auditor to keep workpapers for at least seven years.

Accepted Answer

The Sarbanes-Oxley Act of 2002 mandates that auditors must retain all audit or review workpapers for a minimum period of seven years from the conclusion of the audit or review.

Question 16

Recalculation consists of checking the mathematical accuracy of workpapers.

Accepted Answer

The answer of Recalculation consists of checking the mathematical accuracy...

Question 17

When the auditor examines the revenue cycle, he or she must attend to four major transaction streams.

Accepted Answer

The answer of When the auditor examines the revenue cycle,...

Question 18

Analytical procedures consist of the study and comparison of relationships among data.

Accepted Answer

Analytical procedures involve the evaluation of financial information through analysis and comparison of relationships among data to identify any significant trends or anomalies.

Question 19

Inspecting tangible resources provides the auditor with direct personal knowledge of their existence and physical condition.

Accepted Answer

Inspecting tangible resources allows the auditor to directly verify their existence and assess their physical condition, providing firsthand evidence for the audit.

Question 20

Evidence need not be relevant to management's financial statement assertions.

Accepted Answer

Evidence must be relevant to management's financial statement assertions to effectively support the accuracy, completeness, and validity of those assertions during an audit or financial review.

Quiz 6: Audit Evidence, Audit Objectives,